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question from a new starter.

By jjk2 on Fri, 2008-02-15 01:06

i've been following the markets for about a year. on the side i actively trade currency.

however, im attracted by the value investing philosophy, and its relative soundness compared to daytrading.

i am reading a book called Value Investing from graham to buffett and beyond.

is it a good book?

where do i go from here? i want to try hands on things like analyzing FS, but i do not exactly know what im doing is right, for example appraising current assets and so on, evaluating macroeconomic drivers.

it all seems so ambiguous. like too many subjectiveness. in day trading, i am completely mechanical. in analyzing stocks, i find there are no strict borders, and the effort may not pay off at least after a year or two, or even longer.

one key worry i have is, how do i accurately determine the intrinsic value when thers so much subjectivity to this process. once i have a good measure of intrinsic value, where to go from there? experienced investors must feel some level of confidence about their analysis, i currently do not feel it.

thank you for reading.

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alexg on Fri, 2008-02-15 08:26
Title: Value Investing from graham

Value Investing from graham to buffett and beyond is a must read IMO. But, I would not recommend it to someone starting out in Value Investing. Check out Pat Dorsey's "5 Rules for successful stock investing". Its about $10 on Amazon but will get you started in the right direction. The book provides a great introduction into modern day security analysis, valuation, industry analysis, moats, etc.. After you read that, come back to Value Investing News and ask me what to read next :D

http://www.contrarianvalueinvesting.com/

George on Fri, 2008-02-15 10:03
Title: Re: question from a new starter

I also recommend that you read through Berkshire Hathaway's letters to shareholders. It's one of the best ways to learn how Warren Buffett has crushed the market. He even discussed how to determine intrinsic value in the 1986 letter where he talks about owner's earnings.

spreadsheet on Sat, 2008-02-16 00:28
Title: You should check out buffett's early partnership letters

While I like Buffett there is a dramatic difference between what he is now vs. what he was when he ran his partnership. He's limited in size and his style has changed drastically. Some of his investments he's made over the past 10-15 years have been "borderline" value, at best. To learn the game best, read through Buffett's early partnership letters (posted at http://www.ticonline.com/buffett.partner.letters.html) and I would also recommend Tweedy, Browne's overview, which can be found at http://tweedybrowne.com/library_docs/papers/what_has_worked_all.pdf